In the final days of 2006, the 109th Congress wrapped up business with final passage of key tax, health and trade legislation that will bring pocketbook relief to hard-working taxpayers, reward quality health care services administered to Medicare beneficiaries, open new marketing opportunities for farmers, manufacturers and service providers and boost job-creating incentives for employers.
Let’s start with the upcoming tax season. Arriving better late than never, the end-of-the-year tax bill restores key tax breaks that expired last Dec. 31. Just in the nick of time, the recently signed tax law reinstates the federal tax deduction up to $4,000 for higher-education tuition and fees. That’s welcome news for parents who work hard and sacrifice to pay for their children’s higher education. This follows congressional passage earlier this year that made “529 plans” a permanent college-savings tool for parents. These plans allow parents to invest after-tax dollars in state-sponsored funds. Earnings and distributions are tax-free when used to help pay for college.
Teachers who buy their own classroom supplies can continue to count on the federal tax deduction for these expenses for 2006 and 2007. As chairman of the tax-writing Senate Finance Committee, I secured in 2002 this first-ever tax break for teachers. It’s the right thing to do to reward teachers who pay for classroom materials out of their own pockets. This deduction recognizes the financial sacrifice and commitment teachers have for their students.
The Tax Relief and Health Care Act of 2006 also makes improvements to the Medicare financing system to help keep health care services accessible to seniors, especially in rural areas. By acting before year’s end, lawmakers prevented a scheduled five-percent payment reduction to Medicare physicians in 2007. Instead, a one-year, zero-percent update to the schedule will go into effect on Jan. 1. This ought to help prevent providers from dropping Medicare patients.
For the first time ever, the new law also establishes a quality reporting system for physician services in Medicare starting in July 2007. The voluntary program will pay bonuses of 1.5 percent for covered services to physicians and other eligible health care practitioners who submit data on applicable quality measures. This is an important first step in a long-term effort to improve the quality of health car delivered to Medicare beneficiaries.
The new law also will give seniors and disabled beneficiaries who may require extensive rehabilitative services in 2007 better peace of mind. For those who require significant medical therapy, this legislation also provides a one-year extension of the therapy cap exceptions process that was included in the Deficit Reduction Act last year. This will help ensure beneficiaries receive the physical, occupational and speech language therapy services they need.
The new law also provides more resources to crack down on fraud and abuse in the Medicare program. The current anti-fraud system has been funded at the same levels since 2003 despite significant increases in responsibilities. To ensure the federal government has sufficient resources to effectively combat health care fraud and abuse, this essential program will receive annual funding updates for the next four years.
The bill signed into law on Dec. 20 also establishes permanent normal trade relations for Vietnam. With a population of 84 million, Vietnam promises substantial new market opportunities for Iowa farm commodities, manufactured goods and financial services. The new trade status will help Iowa farmers and businesses forge new ties with the Vietnamese. Having hosted an international trade tour every two years in Iowa since 1986, I know Iowans and the Vietnamese stand to gain through economic growth and cultural enrichment fostered by new business partnerships created due to Vietnam’s new trade status.
Taking stock of the 109th Congress, I’m pleased the Republican-led Congress kept the lid on tax increases, improved the bankruptcy system and delivered the first-ever Medicare prescription drug benefit for seniors and disabled Americans.
Looking ahead to the 110th Congress that opens for business in January, lawmakers have a long to-do list to tackle. We’ll return to work with a full plate of meaty leftovers to digest, including Social Security and immigration reform. Lawmakers also must agree on nine of 11 spending bills necessary to fund the federal government through Oct. 1. New business will include debate on renewal of the federal farm bill.
Returning to key assignments on the Senate Finance, Judiciary, Agriculture and Budget Committees, I’ll work morning, noon and night to represent Iowans’ interests. Thanks for keeping in touch with your views. And remember to come see me the next time I’m in town. Starting in January, I’ll launch my 27th consecutive year of visiting each of Iowa’s 99 counties at least once in 2007.